The industry you operate in appears to be the overriding factor in determining whether your valuation has risen or fallen in 2023, and what 2024 might have in store. New research from Plimsoll confirms that market conditions continue to exert an outsized influence on business values.
The pressures on business valuations are wide and growing. Inflation continues to drive down profit margins for many as costs rise and consumers become harder to reach. Brexit is rendering many established business models and practices unviable. War is adding to the cost of everything from fuel to food. The scarcity of staff continues to stalk British industries.
In all markets, there are pockets of performance that go against the prevailing trends. In some markets where values are under serious pressure, companies are making great valuation strides. In other markets where values are booming, there are companies in decline.
Having analysed more than 1700 different markets across the UK economy, Plimsoll has identified the industries with the highest and lowest valuation growth in the latest year:
The Winners:
Despite the chaos and disruption of the past couple of years, several industries have seen a significant jump in average company valuations:
| Industry: | Change in average company value: | ||
| Music Publishers | 50% | ||
| Blockchain Technology | 44% | ||
| Stage Lighting & Equipment | 42% | ||
| Workspace Design & Planning | 41% | ||
| Oil % Gas | 40% | ||
| Renewable Energy Systems | 40% | ||
| Database Marketing | 40% | ||
| Subsea Engineering | 39% | ||
| Teaching Agencies | 38% | ||
| Tailor Made Holidays | 37% |
Some of the industries listed have enjoyed a huge boost in values as disruption from the pandemic mercifully dissipated.. Music and travel are represented in the industries increasing in value. Others reflect the increased zeal for change with Blockchain and greener engineering also rewarding their protagonists with higher values.
Teaching agencies have clearly enjoyed the fruits of a tight labour market for educators in the UK while Tailor Made Holiday show consumer increased thirst for bespoke tourism and “getting off the beaten track”. Which of these industries will enjoy the same benign conditions in 2024?
The Losers:
There are perhaps fewer surprises among those industries that have seen the biggest decline in average values.
| Industry: | Change in average company value: | |
| Town Planning Consultants | -19% | |
| Highway Maintenance | -18% | |
| Fine Art Dealers | -17% | |
| Direct Mail | -16% | |
| Motorsport | -14% | |
| Soft Facilities Management | -14% | |
| Testing & Inspection Services | -14% | |
| Snack Foods | -14% | |
| Shipbroking | -13% | |
| Pharmaceutical Manufacturers & Distributors | -12% |
The common theme within those markets with the biggest values is the impact of post-pandemic changes in both Global economic reality and societal change. Town Planning and Facilities Management has struggled as the “return to office” after the pandemic doesn’t reflect the old way of working. Does the lack of value in the Highway Maintenance market betray the reason we still have so many potholes on Britain’s roads?
Elsewhere, Pharmaceuticals have seen a sharp fall after the Covid vaccine cash cow ran increasingly dry and the Shipping industry continues to be thwarted by a lack of capacity and soaring fuel costs. As society reopened, it would appear we are also consuming less snacks.
Whatever your industry, whatever the prevailing trading conditions within it, a company valuation is the ultimate measure of overall business performance. A valuation encapsulates sales, profits, productivity and all your other KPIs into one succinct measure.
Great companies maintain a close eye on their overall valuation year on year. They nurture it, search for ways to enhance it, assess the impact their strategy will have on it and build their business thinking around it.
At Plimsoll, we believe that the process of monitoring value and identifying useful, actionable benchmarks should involve no fuss or hassle and incur little cost. Featuring instant valuations, peer comparisons and key industry benchmarks, Plimsoll valuation studies are easy to digest but unrivalled in their depth of insight. We think you should spend more time increasing your business value and waste less time working out what it is.
Search for your industry today at www.plimsoll.co.uk to find out the latest value trends in your market or give us a call at 01642626438.
Published on: 6/11/2023